Zimbabwe Bank Manager Assaulted as Clients Fail to Draw Cash

Zimbabwe’s Allied Bank Ltd. had the
manager of one of its branches in Harare assaulted by customers
angered that a shortage of liquidity meant they were unable to
withdraw cash.

No arrests were made following the Dec. 16 incident, which
resulted in the doors of the branch being smashed, said Paul
Nyathi, a spokesman for the police in the capital. Allied Bank
was bought last year by Transport Minister Obert Mpofu after his
investment company injected $23 million into the lender.

“We sincerely apologize for the inconvenience emanating
from the prevailing cash shortage,” Allied Bank Chief Executive
Officer Stephen Gwasira said in a statement yesterday. “The
bank is making aggressive efforts to address the liquidity
constraints.”

Lines also formed at Metropolitan Bank and Johannesburg-based Business Day newspaper reported that some Zimbabwe lenders
have imposed limits on the cash clients can withdraw. The
liquidity crunch partly results from the central bank not taking
on the role of “lender of last resort,” said Sij Biyam, CEO of
the Bankers Association of Zimbabwe.

“The main problem which is affecting most of these
institutions is because of liquidity issues rather than solvency
issues,” Biyam said in a phone interview from Harare. “The
fault line is the absence of lender of last resort in the
country, because there is no overnight lending.”

Liquidity Crisis

The southern African country’s central bank said in March
that two or three banks were struggling to raise funds to meet
part of a $100 million capitalization.

Steward Bank isn’t affected by the “liquidity crisis”
after the lender formerly known as TN Bank implemented
restructuring, said Douglas Mboweni, CEO of its owner, Harare-based Econet Wireless Zimbabwe Ltd.

“We brought in experts who looked very carefully at what
was needed to operate a bank successfully in a market with no
lender of last resort,” he said. “We cleaned up the balance
sheet, wrote off bad loans, and fully recapitalised the bank.”